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THIS WEEK AT WAR

This Week at War

Aired July 8, 2006 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL LIN, CNN CORRESPONDENT: I'm Carol Lin in Atlanta. This week at war begins in just a moment, but first a look at what's happening right now in the news. A U.S. Navy ship that tracks enemy missiles has docked in Japan. But the U.S. military says its deployment is not linked to nuclear tensions with North Korea. A U.S. envoy says the U.S. will hold bilateral talks with North Korea if Pyongyang joins six party talks that are stalled.
The FBI says martyrdom and explosives were part of an Islamic terrorist plans to attack New York tunnels. Three people, including the alleged ringleader are behind bars, but five other suspects are still on the loose.

And a terrifying crash in New London, Connecticut. Officials say an elderly man drove into a crowd of pedestrians at an event called Sailfest. Twenty seven people were injured, two of them seriously. The town's mayor says that the driver was confused. He was taken to a hospital for evaluation.

And next an in-depth look at the North Korean threat, the latest from Iraq and much more. John Roberts hosts this week at war. I'm Carol Lin at the CNN global headquarters in Atlanta. This week at war starts right now.

JOHN ROBERTS, CNN ANCHOR: I'm John Roberts with this week at war. From a terror plot in New York to North Korean missiles to fresh tensions in Iraq. We'll get perspective on this week at war. Let's take a look at what our correspondents reported day by day. Monday, former U.S. Army Private Steven Green appears in Federal court, charged with raping and killing an Iraqi woman and murdering her family. Tuesday, North Korea defies international pressure and launches missiles, what the Bush administration calls a clear provocation. Wednesday, new tension in the Middle East as Israel pushes into northern Gaza to stop Palestinian rocket attacks. Thursday, chilling words from one of the bombers who struck London one year ago. Friday, New Yorkers wake up to reports of a terror plot to blow up tunnels. All of that ahead in this week at war.

Late in the week, New York City officials revealed a terror plot to blow up city tunnels. Intelligence officials picked up the plan in its earliest stages in an Internet chat room known to be frequented by terrorists. New York Mayor Michael Bloomberg responded to the threat on Friday.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG (R), NEW YORK: Coming as it does on the first anniversary of the terrible terror bombings in London, this is one more reminder that in today's world, our safety can be menaced from any corner of the globe.

(END VIDEO CLIP)

ROBERTS: Here in Washington, justice correspondent Kelli Arena and in New York, CNN security analyst Pat D'Amuro. He's the former assistant director in charge of the FBI's New York office. He's also the chairman and CEO of Giuliani Safety and Security. Kelli, recap for us. What do we know about this plot?

KELLI ARENA, CNN CORRESPONDENT: We know that the FBI was turned on to it about a year ago, that the investigation started then, that analyst intercepted information off of an Internet chat room. We know that one person is in custody in Beirut, Asem Mahoud (ph), who allegedly the mastermind of the plot and there are two other people in custody but the FBI is not disclosing where those people are. And one more thing the FBI says, hey, we're on top of this. No eminent threat to either New York City or any other city in the United States.

ROBERTS: So Pat D'Amuro, the threat may not have been eminent or urgent, but was it viable?

PAT D'AMURO, CNN SECURITY ANALYST: We know going back to 1993 John that there were long-term plots to attack the tunnels. The Holland tunnel, the UN, the Federal building were threatened in what the bureau, the FBI called the terror stop investigation. That was with the blind sheik. So we know they al Qaeda wants to come back to the targets that they threatened to attack before, much as they did with the World Trade Center and the financial district of Manhattan. So yes, this is a viable, real threat.

ROBERTS: Kelli, was there ever any evidence that any members of this group were in the United States?

ARENA: No, and there's no evidence that any of them are here now. Interestingly, the man who is in custody in Beirut though, according to officials, had a connection to al Qaeda. He pledged (INAUDIBLE) loyalty to Osama bin Laden, said that he is a self-proclaimed member of al Qaeda and that connection is still being investigated.

ROBERTS: Pat D'Amuro, you mention that the bridges and tunnels in New York have been a target going all the way back to 1993 and the group that was led by the blind sheik. How vulnerable are those tunnels to a large quantity of explosives and could you even get any large quantity of explosives in there given that most trucks that go through them are inspected these days.

D'AMURO: That's true and much of that has changed since 9/11. Trucks are inspected and to really, to do any damage in a tunnel like that, they would need a rather large explosive device. I'm sure bomb experts have looked at post blast and what would it take to cause significant damage to those tunnels. Al Qaeda does use a lot of truck bombs, the east African bombing in 1998, a large truck bomb was utilized to bring down both the embassy in Nairobi and Dar El Salaam.

ROBERTS: Kelli, did revealing this investigation now compromise it at all?

ARENA: It always does. This was premature. They did not want this information out. The Lebanese did not want the information out so, yes, it did.

ROBERTS: And Pat, what does this say about the recent decision by the Department of Homeland Security to cut terror funding for New York City, saying that there were no landmarks there that would be targets for al Qaeda or other terrorist groups?

D'AMURO: Well, I think this is going to be an issue for some time to come. Is the Federal government going to fund all the terrorism initiatives across the country or are cities going to be have to be responsible for picking up the tab on some of that security? There will be a lot of discussions over that.

ROBERTS: Pat D'Amuro, as always, thanks for your expertise. Kelli, thanks for your analysis and for revealing what some of your sources are telling us, appreciate it.

The New York story breaking on the one-year anniversary of the attacks on the London transit system. The sound of big Ben on Friday beginning a two-minute silence in London and throughout Great Britain, a tribute to victims of last year's terror attacks. How big a threat is al Qaeda in London and Europe in general, one year after the bombings on a London bus and in the underground? Chief international correspondent Christiane Amanpour covered the story then and now. She joins us from our London bureau. Christiane, let's take a look at the one-year anniversary piece that you filed on Friday.

(BEGIN VIDEO CLIP)

CHRISTIANE AMANPOUR, CNN CORRESPONDENT (voice-over): It became clear that this was Britain's 9/11. Three nearly simultaneous bomb attacks on the London underground. Thirty minutes later, an explosion rips open a London bus. In all, 52 people were killed plus the four bombers. Another 700 were wounded. At 12:10 that day, a website linked to al Qaeda claims responsibility for carrying out quote, blessed raids in London.

(END VIDEO CLIP)

ROBERTS: Christiane, a year later, what effect have those bombings had on Britain?

AMANPOUR: From the beginning, London has never succumbed to a panic, to a national crippling sense of fear. They've carried on. They've got on with it. This is a country and a city that has suffered terrorism and a world war in the past and has got on with it. That if you like the zeitgeist of this place. However, it does have an effect. Of course when something like that happens, the one thing people want to know, is it ever going to be happen again and can it ever happen again. So on the first anniversary while the flowers were being laid in commemoration, while candles were lit, while their vigils and the names of the victims being read out for memory and posterity, people also want to know how could that have happened here, British citizens, British Muslims attacking not just their own fellow citizens, but plenty of tourists and plenty of nationals from all over the world who were using that mass transit system and they want to know do our security services here have a real handle on what happened and can they prevent it from happening again?

ROBERTS: Well, what is the answer to that question? Have British authorities learned much about the attacks of the past year?

AMANPOUR: They have learned quite a lot. They obviously knew immediately who it was thanks to the IDs and the CCTV (ph) coverage. They know because of the tapes that have come out, who it was linked with and that is al Qaeda and they have done a lot of investigations. It's being called the biggest ever investigation in Britain. They have had dozens of people arrested and dozens who have been sent to trial and will face trial on terrorism offenses. However, at the same time, a parliamentary panel has basically said that the intelligence services and abilities are stretched thin and that what needs to be done as a security analyst will say and it's also a military term that's used in fighting insurgents, the space for these people to operate in our society and these democracies needs to be eliminated. So somehow it needs to be addressed from a grassroots level. In these communities, these kinds of situations should not be able to crop up. There needs to be much more vigilance. There needs to be much better, not only community policing, but also national and security policing to be able to identify these threats long before they materialize.

ROBERTS: Christiane, how did this recent tape from Shazan Tanweer (ph) go over, particularly this idea that what happened in London on 7/7/2005 was just the beginning?

AMANPOUR: That's precisely what this tape of his did say. He's one of the four bombers who was killed. So this was a very cunning attempt by al Qaeda or whoever delivered this tape. They did it before he was killed. They kept it. They resisted the impulse to release this tape in any part of the intervening year and they released it right on the anniversary designed for maximum terror impact, maximum chilling impact and what they said on this tape as it was broadcast by al Jazeera was that this is as you said, just the beginning. They linked it, those bombers in their tapes that have been released, link it to all sorts of political reasons, the war in Afghanistan, the war in Iraq. And that's what they're saying to fellow Britains.

ROBERTS: Continuing worries in two of the world's biggest cities as to how vulnerable they are to terrorism. Christiane Amanpour in London, thanks.

Coming up, the threat from the far east, the missile gambit by the ever unpredictable North Korea. But first a look at some of those who fell in this week in war.

(END VIDEO CLIP)

ROBERTS: What was North Korea trying to tell the world this week with that Fourth of July barrage of missiles? Here for some analysis and perspective, Pentagon correspondent Barbara Starr, senior United Nations correspondent Richard Roth and with me here in the studio, John Pike, director of global security.org, tracking military and security problems. President Bush spoke out against the North Korea missile launches throughout the week. Thursday, he said the U.S. will pursue diplomacy despite North Korea tuning out the rest of the world.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are dealing with a person who was asked not to fire a rocket by the Chinese, the South Koreans, the United States, the Japanese and the Russians and he fired seven of them.

(END VIDEO CLIP)

ROBERTS: John Pike, President Bush said repeatedly throughout the week, he was not sure of Kim Jong Il's intentions. What kind of message do you think the North Korean leader was trying to send here? Was this sort of you're talking directly to Iran or you're offering to talk directly to me as well.

JOHN PIKE, GLOBAL SECURITY.ORG: I think he's demonstrating that he's still a force to be reckoned with, that he's somebody who can set the pace for events, that he cannot be ignored and that he is a threat that the United States is going to have to deal with one way or the other.

ROBERTS: Some people have likened him to an unloved child and this was just a tantrum to get attention.

PIKE: Well, I think that you do have metaphors for him, that he does act out to get attention, that he does like to get on TV. I think those metaphors will get you some way down the road, but at the end of the day, it's a bit more complex than that. They have a very complex leadership cult over there. He does need to get attention.

ROBERTS: Barbara Starr, how much of a threat does this really represent? North Korea's vaunted (ph) long-range (INAUDIBLE) two missile barely made it off the launch pad.

BARBARA STARR, CNN CORRESPONDENT: Well, that's right. Apparently, they suffered some sort of failure. That missile basically failed within seconds of launch, officials saying that less than 60 seconds in flight. So from a pure military threat perhaps, not what was anticipated. But of course the U.S. is now concerned about what might be coming next from Pyongyang. What are they going to do with their missile program. Now they're certainly going to go look at how and why might it have failed and what improvements will they make.

ROBERTS: And some analysis that showed that the trajectory of that missile may have been in the Pacific somewhere near the Hawaiian Islands. U.S. ambassador to the United Nations John Bolton said that there was general agreement against North Korea and the missile tests. He spoke Wednesday as the United Nations Security Council talks continued.

(BEGIN VIDEO CLIP)

JOHN BOLTON, U.S. AMBASSADOR TO U.N.: No member defended what the North Koreans have done. And I think that the tenor of that discussion shows how little support there is in the international community as a whole for these North Korean missile launches.

(END VIDEO CLIP)

ROBERTS: Richard Roth, displeasure all around at the launches but not universal appetite at the Security Council for sanctions.

RICHARD ROTH, CNN CORRESPONDENT: Yes, John, disagreement on the approach once again. Big power showdown and deadlock with China and Russia on one side, not interested really in sanctions on North Korea, France, Britain and the U.S. on the other. The U.S. trying to put the pressure on here and not succeeding as the week went on.

ROBERTS: John Pike with China and Russia refusing to get tough at the United Nations with North Korea, what else can the United States do?

PIKE: Well, not a lot. That's the problem right now. Military action I think really is not on the agenda. The American missile defense system, probably not terribly effective. Japan still defenseless. There are no good options at this point.

ROBERTS: Barbara Starr, what about that idea of military involvement? The president insisting that he wants to proceed diplomatically, but there must be some sort of a contingency plan?

STARR: Well, it did turn out that during this period when they were launching these seven missiles out of North Korea, the U.S. missile defense program was fully operational, fully activated. The president had everything ready to go. The option he had on the table of course was firing one of those U.S. interceptor missiles to try and shoot that long-range missile down. At the end of the day of course, they didn't have to, because it went down all by itself. But this was sort of a dry run if you will. Everything in place to execute that military option, if it had become necessary and that President Bush had wanted to order it.

ROBERTS: An option that is highly unattractive though from a number of different perspectives. The North Korean missiles intensify questions here in Washington. How does the U.S. protect itself against missile attacks? As Barbara just mentioned, there is that anti- ballistic missile system. On Tuesday, she filed this report.

(BEGIN VIDEO CLIP)

STARR (voice-over): If the launch were an attack, could we shoot down the North Korean missile? A feat described as the equivalent of stopping one moving bullet using another bullet. There have been 10 tests of the U.S. interceptor. Only half have worked.

(END VIDEO CLIP) ROBERTS: Barbara Starr, had this have been an actual attack, could that missile have been shot down? President Bush said at a press conference in Chicago on Friday that the system was quote, modest, at best.

STARR: That's the real question underlying all of this John. The U.S. says that it has this system. It says it's operational, fully activated, ready to go. But as we know, over many years, billions of dollars have been spent. It has a very mixed success rate and certainly the thing the U.S. does not want to do is fire against the North Koreans and miss. It's just another reason really that a military option, as John Pike was saying is not the way that the Pentagon thinks is the way to go. They are fully on board with the diplomat option. That's what they'd like to see work here.

ROBERTS: John Pike, the missile defense shield, is it really necessary given that North Koreans can't even seem to get its long- range missiles off the ground? It doesn't have that capability but could it have the capability?

PIKE: The problem is that it already has the capability to shoot nuclear tipped missiles against Japan. Japan does not have a missile defense. It's going to start building one. This isn't going to come online though any time soon.

ROBERTS: Richard Roth, wrap this up for us. Where is this process going next?

ROTH: The U.S. continues to need China and Russia, maybe an area such as Iran and John Bolton talked tough here while President Bush in Washington said diplomacy takes time. This will be a continuing issue going forward, how tough to get on these types of countries which have nuclear weapons, potentially. The U.N. Security Council is no longer in this post-cold war euphoria unanimity.

ROBERTS: And many U.S. officials fully believing that North Korea could launch another round of missiles at some point in the future. Richard Roth at the United Nations, Barbara Starr at the U.N and John Pike here in the studio, thanks.

Coming up, the week in Iraq, another murder investigation involving U.S. troops in Iraq. We will get details after the week. But first, the faces of some of the fallen in this week at war.

(COMMERCIAL BREAK)

ROBERTS: Talk about a clerical error. A captain in the National Guard served a full year in Iraq only to learn that he was sent there by mistake. Ohio's Jim Dillinger did the dangerous duty of finding and removing roadside bombs. It wasn't until he returned that he learned the army had gotten the date of his discharge wrong. Sorry, said the army, we made a mistake.

(BEGIN VIDEO CLIP)

JIM DILLINGER, INDIVIDUAL READY TO SERVE: You can't get it back. My son grew six inches while I was gone. I don't get that back. Tremendous amount, how important my family is to me. Too many things I took for granted like that before I left. Our mission, our job, the role we played to maybe bringing a few of those home, it was worthwhile for many of us.

(END VIDEO CLIP)

ROBERTS: This was the week of another murder charge against a former American soldier, prompting top officials for calls for a full investigation. Joining us from Baghdad, correspondent Arwa Damon, from the Pentagon, Barbara Starr and here in our studio, Brigadier General James "Spider" Marks, U.S. Army retired.

Aftershocks in Iraq this week from crimes allegedly committed by the U.S. military against Iraqis. We learned new details of rape and murder charges against a former U.S. soldier, a murder that allegedly occurred in Macmudia (ph) in March. Thursday saw a rare joint statement from the U.S. ambassador to Iraq and the top U.S. commander. Ambassador (INAUDIBLE) and General George Casey wrote quote, the alleged events of that day are absolutely inexcusable and unacceptable behavior. We will fully pursue all the facts in a vigorous and an open process, end quote. Arwa Damon, that's a pretty high profile statement. Is that an indication of how potentially serious this incident is?

ARWA DAMON, CNN CORRESPONDENT: Yes, it is John and this is incredibly serious. The U.S. military is taking it very seriously. These types of incidents consume senior commanders, consume the senior leadership. They have to right this type of wrong. In fact if you look to the Iraqi government and their reaction, the Iraqi Prime Minister Nouri al Maliki (ph) has issued his harshest words to date against the presence of coalition forces here in Iraq. He said that the immunity granted to international troops in Iraq has emboldened them and is asking for a review of this immunity.

ROBERTS: What about that Spider Marks? Is that a fair statement to say that the immunity that U.S. troops enjoy on the battlefield in Iraq and around the world is fertile ground for the commission of crimes?

BRIG. GEN JAMES MARKS, U.S. ARMY (RET): I've got to challenge that. The United States very specifically holds its soldiers and its Marines and all its service members to an extremely high standard. It is not fertile ground for the commission of crimes and in fact the U.S. military will very aggressively pursue any allegation and we've already seen that. The top commander on the ground has no choice other than to pursue this very aggressively as he will.

ROBERTS: And regardless of who calls for removal of this, of rescinding this immunity, that's not about to happen.

MARKS: No, it will not happen. It will not happen.

ROBERTS: Now the Pentagon probe of the alleged rape and murders in Macmoudia (ph), it is the fifth investigation into charges that American troops have killed innocent Iraqi civilians. On Tuesday, military officials continued to say that these are isolated cases.

(BEGIN VIDEO CLIP)

MAJ. GEN. WILLIAM CALDWELL, MULTI-NATIONAL FORCE IRAQ: This is not a trend. But in fact you have is hundreds of thousands of men and women in uniform that have served over here in Iraq and have done so very professionally, upholding their standards, maintaining their values and taking what they came over here to do as an important mission, that is protecting and defending the people of Iraq.

(END VIDEO CLIP)

ROBERTS: Barbara Starr at the Pentagon, these cases may be isolated, but are they expected in an occupation that has gone on in for more than three years now?

STARR: Well, expected I don't think so, but clear the assessment is somewhere in between all of this. These terrible crimes if they are proven in a court of law are just that. They are crimes. These people will then if convicted, go to jail for some lengthy period of time. The question might be much deeper that the military is basically just barely beginning to grapple with and that is the question of stress, is the question that they really don't want to have to answer right now. Three, three and a half years into an insurgency war, is there some type of combat stress out there that perhaps the Pentagon is not yet recognizing, something that they are going to have to deal with. Counter insurgency warfare is very tough business. That is quite separate from the crimes that may have been committed here. But the question John is, is there something else going on here that has to be dealt with?

ROBERTS: Arwa Damon, what if any effect is this having on the credibility of U.S. troops in the eyes of Iraqis?

DAMON: Incidents like this (INAUDIBLE) interesting way on the Iraqi street. Naturally, there is enormous outrage that this type of thing could have happened. Keeping in mind that honor and dignity are pillars of the culture here. They are pillars of Islam. But (INAUDIBLE) the overall view against U.S. troops, even though this is the fifth incident that is being investigated, I think there's a certain amount of recognition that this is not happening all across the country. There was an interesting thing to point out, that despite the outrage expressed by Iraqi civilians and the Iraqi government, this story is not getting much play in the Iraqi press. State-owned television is reporting on it, but it's not a top story. Iraqi newspapers are reporting on it, but it's not in their front pages, which is perhaps an indication of the realization just how sensitive this type of an issue is.

ROBERTS: Interesting. U.S. Troops are holding tough in Ramadi's municipal compound, dead center of the insurgent stronghold, 40 miles west of Baghdad. On Wednesday, a U.S. commander proposed the idea of knocking down the surrounding buildings, buildings that have been providing cover for snipers.

(BEGIN VIDEO CLIP) COL. SEAN MACFARLAND, U.S. ARMY: We're looking for ways to make lemonade out of lemons. The buildings are rubble essentially as they now stand, if they stand at all. And once we clear that area out, we will have a nice open area that will give us some standoff against enemy snipers, but it will also afford us the opportunity to rejuvenate the center of the city.

(END VIDEO CLIP)

ROBERTS: Spider Marks, is this a way to stay and fight rather than bulldoze and clear out?

MARKS: It really is and I've got to tell you, Sean Macfarland and I served together in harm's way before. He is a magnificent soldier and he's got his finger on the pulse. What he is indicating is that there is a requirement for forced protection in what we would call a normal state of operations and you've got to provide that. So the issue then can become, I mean, there are really two sides to this. Are we putting - is the coalition force putting a barrier up so that you can't have interaction? Or is this, is the barrier essential to provide some degree of standoff and some degree of force protection so normalcy in governance can take place?

JOHN ROBERTS, HOST: Well, we'll see if the experience works.

Now, a remembrance.

Elisha Parker of Taberg, New York joined the Marines after finishing high school. Sergeant Parker never returned from this third tour of duty in Iraq. He was 21.

(BEGIN VIDEO CLIP)

RENNY PARKER, FATHER OF ELISHA PARKER: I'm not sure why he did join the Marines. I think he wanted to be challenged. I think he felt that was the toughest school. He wanted his heart to beat hard.

He was a great "Seinfeld" fan. This was sent to us from California. George Fistanza (ph) had a wallet and apparently he never wanted to throw anything out or any of his recipients and Eli was not a -- was not one to be wasteful.

DONNA PARKER, MOTHER OF SERGEANT ELISHA PARKER: And he was an avid Spiderman fan. He just loved Spidey. He said he was going to name his first child Peter, Peter Parker, after Spiderman.

R. PARKER: Sunday evening the week of his death he called and...

D. PARKER: He was going out, he said, for an eight day mission. And he indicated to us that it as going to be dangerous. And it was maybe three or four days later that we found out about his death.

It doesn't seem fair or seem right. But, you know, we just have to keep going on. And we'll never forget him.

(END VIDEO CLIP) ROBERTS: General Marks, how do you feel when you see a story like that?

MARKS: It's tough to comment. It's very tough to comment. My father-in-law was killed in combat in Vietnam. I mean this is very hard, very hard to view.

ROBERTS: General Marks, as always, thanks for being with us.

Arwa Damon in the thick of it in Baghdad and Barbara Starr at the Pentagon, thanks.

When we come back, we'll turn to the Middle East, where the search for a kidnapped soldier has brought a vicious spiral of violence.

But first, a look at those healing the wounds of war -- doctors, nurses and dentists from the New York National Guard are gearing up for duty in Iraq. Monday, members of the 466th Medical Company bade farewell to their loved ones.

(BEGIN VIDEO CLIP)

CARRIE SEROW, WIFE OF SPC KEN SEROW: I'm very proud of all these soldiers. But I'm going to be very sad.

LIZ GREEN, WIFE OF MAJOR RICHARD GREEN: I'll pray every day for my husband's safe return. I'm very proud of him. When he said he loves his country, he really does.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CAROL LIN, CNN ANCHOR: More of THIS WEEK AT WAR in just a moment.

But first a look at what's happening in the news.

We want to show you a high tech U.S. missile destroyer now parked in the Japanese port. But the Navy says it's a preplanned deployment and not a response to North Korea's nuclear tests.

Israeli aircraft fired a missile into Gaza City. Israel's military says it was targeting a group of suspected Islamic Jihad militants in Gaza City. But Palestinian hospital officials say four people were wounded.

The Coast Guard says a Cuban woman died of severe injuries after a high speed chase at sea. She was one of 31 immigrants in a vessel that rammed a Coast Guard speed boat as it was racing toward the Florida coast.

Now, in just 30 minutes, a Korean-American journalist goes undercover to reveal how brutal life can be in North Korea.

"CNN PRESENTS: UNDERCOVER IN THE SECRET STATE." That's at 8:00 p.m. Eastern.

That's what's happening right now in the news.

I'm Carol Lin.

Now back to THIS WEEK AT WAR.

ROBERTS: In the Middle East, this was a week where it seemed that any progress made toward peace between Israelis and Palestinians was melting away, as the kidnapping of one young soldier brought open warfare to the streets of Gaza.

Here to help me analyze this conflict situation are Paula Hancocks in Gaza City and John Vause in Jerusalem.

In Gaza, tensions escalated throughout the week. By Thursday, as our other Paula, Paula Newton, reported, the battle was joined.

(BEGIN VIDEO TAPE)

PAULA NEWTON, CNN CORRESPONDENT: This is what the Israeli Army was trying to avoid -- house-to-house combat in neighborhoods, where civilians are in the line of fire. It's been impossible to avoid. Already, there are dozens of civilians injured and dead.

(voice-over): The injured arrive in waves, each attack producing new casualties. This boy was shot in the chest.

(END VIDEO TAPE)

ROBERTS: Paula Hancocks, this open warfare on the streets of Gaza, could this possibly be the beginning of a new intifada that could also spread to the West Bank?

PAULA HANCOCKS, CNN CORRESPONDENT: Well, John, the second intifada is still going. This started in September of 2000. We had seen a relatively quiet period in the last years. We have seen nothing like the violence we had back in 2002.

But this is the biggest violence that we have seen in some time. I mean, the Israeli forces, the Israeli settlers pulled out of Gaza a year ago and they said that they were expecting it to be a lot quieter here. The Palestinians were celebrating the fact that the Jewish settlers were leaving Gaza itself.

And it's a very different picture just one year on. We can see there's helicopters above us. There's drones continuing to go, shelling in the background. It's very disappointing to many of the Palestinians here. And there's a huge amount of anger because they have been so many deaths over the past couple of days. And we've had 10 nights in the row of air strikes. And every single night these air strikes will claim at least one life.

ROBERTS: John Vause, last week the Israelis were pretty upbeat about the operation against Hamas.

How are they feeling about it now?

JOHN VAUSE, CNN CORRESPONDENT: Well, the big concern for the Israeli military officials and Israelis themselves is what they call the Gaza swamp, being drawn into some kind of protracted military operation in Gaza. We have two operations ongoing now. We have the one in the south, which involves the missing Corporal Gilad Shalit and the one in the north, which is involved in trying to stop the firing of those crude homemade Kassam rockets.

This was all sparked after one of those rockets, for the first time, reached the center of a major Israeli city, Ashkelon.

So the troops and the tanks were sent in to try and create a buffer zone, about a mile or so, push the militants back, push them down, further away from Ashkelon and create that buffer zone.

But the fear is that as those missiles, those Palestinian missiles have better capabilities, better engines, then the Israelis will have to keep moving south, have to push further and deeper into Gaza. And the concern is that once the Israelis are in there, there's no real exit strategy to get out.

ROBERTS: Paula Hancocks, the Palestinian leadership has been split since Hamas took over parliament.

Is there any indication that the two sides are coming together against Israel, coming together against a common foe?

HANCOCKS: Well, we've certainly seen that in the past 10 days. Yes, John. I mean for the past months we've had bloody fighting on the streets between Fatah, who used to be in power, and Hamas, who are now in power. But nothing unites two enemies more than a common enemy. And, of course, that's Israel.

So, yes, we are seeing a lot more cooperation between the two. We're definitely seeing less infighting. There's still some internal fighting. But I went to a radio station, Al-Manar station here in Gaza, just a couple of days ago. And it was interesting to listen to how people from Fatah and from Hamas were joining together and saying the same things.

A week-and-a-half ago they were saying we should release this soldier with promises of Palestinian prisoners being released. Now, just a couple of days ago, they're saying we should keep hold of this soldier as a bargaining chip and make sure that these Palestinian prisoners are released from Israeli jails beforehand, because they now trust the Israelis even less.

So in that distrust, they're actually pulling closer together. And the more you have air strikes, the more you have these sonic booms, which terrify the children and pretty much everybody here in Gaza, the more you have that kind of military operation against you, inevitably, it is going to bring people closer together, whatever faction they're from.

ROBERTS: And John Vause, quickly bring us back to the big picture here. The peace process has been basically dead since Hamas took power. But this latest violence, does this really kind of eliminate the hope that peace will ever come to pass?

VAUSE: Well, you never say never. This is the Middle East and there's always out of, you know, out of disaster and tragedy you can often find triumph and hope. But, obviously, peace is now even further away than it has really ever been since the failure of the Camp David peace talks back in 2000.

What we're seeing now is really any progress which was made, any hope that the disengagement, the evacuation of the Gaza Strip last summer, a year ago, any hope that has come from that has now just been completely erased. These sides are back, really, fighting again, back to square one, back to, really, the start of the intifada.

There are many, many dark days ahead. And, of course, this is going to get a lot worse before it even gets better -- John.

ROBERTS: Right. Every time there's a little bit of progress, there's always a few steps back.

John Vause in Jerusalem and Paula Hancocks in Gaza, thanks.

Coming up, the threat from North Korea, Iran and Iraq -- we'll take a closer look at the so-called axis of evil.

But first, another moment from this week at war.

One of the mightiest ships in the Navy is back in home port after its first big spin around the globe. On Thursday, the aircraft carrier Ronald Reagan steamed into Southern California. The carrier's crew of nearly 5,000 sailors served six months at sea in support of the war in Iraq and the broader war on terror.

Here's the man in charge of the Reagan carrier group.

(BEGIN VIDEO CLIP)

REAR ADM. MICHAEL MILLER, CMDR. USS REAGAN: As we were leaving the Gulf, many of the sailors felt just as I did, that there was unfinished business there. They truly believe that they're making a difference. And I think if you've got meaningful work and service to the nation with great people, you know, that's about as good as it's going to get.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: States like these and their terrorist allies constitute an axis of evil, arming to threaten the peace of the world by seeking weapons of mass destruction. These regimes pose a grave and growing danger.

(END VIDEO CLIP)

ROBERTS: President Bush in his State of the Union Address in 2002, dubbing Iraq, Iran and North Korea the so-called axis of evil.

Here we are now, more than four years later, and one way or another, all three still pose threats.

Joining us here in our studio, White House correspondent Ed Henry, former State Department Counselor Wendy Sherman, who worked on North Korea policy and from New York, Jane Arraf, currently with the Council On Foreign Relations and formerly CNN's Baghdad bureau chief.

Wendy Sherman, let's start with you.

Some people have observed that President Bush seems to have a crisis in every direction he looks now.

What kind of spot is he in?

AMB. WENDY SHERMAN, FORMER STATE DEPARTMENT COUNSELOR: I think he's in a very tough spot. This is a president who's been asserting reality for nearly six years, including the fact that the mission was accomplished in Iraq. And now reality is asserting itself on him and it doesn't look pretty.

ROBERTS: Earlier this year, he sort of quipped that he was -- he had just gotten out a little bit early on the axis of evil, almost making light of the fact that all three of those countries were now a major problem.

Here's President Bush on Thursday, expressing the current state of his world view.

(BEGIN VIDEO CLIP)

BUSH: It's just really important for -- for the American president to see the world as it is, not the way we would hope it would be, and to deal with threats and to do so in a way that will achieve results.

(END VIDEO CLIP)

ROBERTS: Ed Henry, this is a world view very much shaped by 9/11.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Absolutely. And I think what was striking is that when you heard what he said in that presser there, he kept talking about diplomacy, allies, partners. Striking in that it's a complete opposite way that he handled the most leading up to the war in Iraq.

And his supporters are saying, well, the president learned something from how he handled Iraq. This time he's going to be all about diplomacy.

His critics are saying that's by -- not by design, it's he has no other option, because his credibility has been shredded because of Iraq.

ROBERTS: But one of the big questions the critics are asking is can he handle all of this? They have said this is a White House that gets fixated on one aspect or another and can't keep all those balls in the air.

HENRY: White House aides insist they can. But there's no question that Iraq has been such a heavy distraction. And, also, we have so many troops there, obviously, that it would be extremely difficult, if not impossible, to wage a war in Korea and Iraq at the same time. And let's not forget about Iran being a threat, as well, as you noted.

ROBERTS: Jane Arraf, you have been studying the insurgency in Iraq as part of your fellowship there at the Council.

Is President Bush going to be dealing with this insurgency throughout the rest of his presidency, in your opinion?

JANE ARRAF, COUNCIL ON FOREIGN RELATIONS: And that's an optimistic view, John. Certainly this insurgency is going to last, likely, long beyond his presidency. And one of the things he keeps saying is that a democratic Iraq will set an example. And there is another problem. What we're looking at is not exactly a democratic Iraq right now.

ROBERTS: Iraq and Iran have traditionally been a counter balance to each other. With Iraq now in a weakened state, even though U.S. forces are there, and Iran seeking nuclear weapons, how could that balance be shifted?

ARRAF: Well, in Iraq, certainly, it's -- I think the thing that we've come to realize -- and the thing that, interestingly, President Bush seems to be a little more sober about it that there are no easy solutions to this, that this is a very long-term prospect.

In terms of Iran, one of the interesting things, as we've just heard, is that essentially he is agreeing to that view that it's not always the best thing to go in there and say bring it on, that a lot of times what this calls for is diplomacy, and that's what we're seeing more of right now.

ROBERTS: Wendy Sherman, back to North Korea.

How much of a threat is Kim Jong Il?

SHERMAN: I think that the real problem we have is not that Kim Jong Il is an immediate threat today, because he doesn't have the nuclear warhead that can fit on a long-range missile, nor have the long-range missile capability. But we really can't wait around for the few years it will take him to reach that capability. We need to nip it in the bud now. And it's interesting the language the president chose, talking in general, that we have to deal with the way the world is, not the way we wish it to be.

For many years, many of us have been saying we have to deal with Kim Jong Il as he is, not as we wish him to be. It's not about ending the regime. It's about dealing with it.

ROBERTS: Well, the axis of evil, which may not have been quite the threat that President Bush posed it in 2002, certainly now appears to be.

Ed Henry, Wendy Sherman and Jane Arraf, thanks very much.

President Bush once said Osama bin Laden could never hide long enough to escape.

Is the United States now giving up the hunt?

Coming up next on THIS WEEK AT WAR.

(COMMERCIAL BREAK)

ROBERTS:

(BEGIN VIDEO TAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over):

(END VIDEO TAPE)

ROBERTS: This week, the search isn't over, but according to the CIA, it's history. The special CIA unit in charge of the hunt for Osama bin Laden has been disbanded. CIA officials say that there's a good reason for the move. Critics call it a mistake.

On Tuesday, CNN's national security correspondent David Ensor filed this report.

(BEGIN VIDEO TAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): He's still out, still putting out tapes...

(AUDIO CLIP FROM ARABIC TAPE)

ENSOR: But the unit at the CIA formed in 1996 to track Osama bin Laden down was disbanded late last year, intelligence officials confirm, and its analysts reassigned to other counter-terrorism tasks. The CIA unit was closed, intelligence officials say, because homegrown al Qaeda-inspired groups like the bombers of London and of Madrid, are a greater concern now than bin Laden himself.

(END VIDEO TAPE)

ROBERTS: Joining us now, former deputy director of the CIA, John McLaughlin. He's also a CNN security analyst. And Robert Grenier, former chief of the CIA's Counter-Terrorism Center. It was his decision to shut down the Osama bin Laden group.

And, Robert, maybe you could tell us why.

ROBERT GRENIER, FORMER CIA OFFICER: Well, in fact, we really didn't shut down the Osama bin Laden group per se. What we did was to reorganize the center in order to clarify the division of labor within the center. There certainly has been no reduction in the priority that's been assigned either to Osama bin Laden or to al Qaeda more broadly.

ROBERTS: Do you agree, John McLaughlin, with the discussion to close it down?

JOHN MCLAUGHLIN, FORMER CIA DEPUTY DIRECTOR: Oh, absolutely.

ROBERTS: (UNINTELLIGIBLE)?

MCLAUGHLIN: This is not a diminution of effort. This was a unit formed in the mid-'90s, when there was concern that there wasn't enough attention being paid to bin Laden. Well, now he's the number one wanted guy in the world and you still have people waking up at the CIA every day worrying about where is bin Laden and how do we get him. They're dispersed now among many different units, just as al Qaeda is dispersed around the world.

ROBERTS: But you, you and Mr. Grenier say that it's not a diminution. But some people out there believe it is, including our own Peter Bergen, our CNN security and terrorism analyst.

Here's what he had to say about that on Thursday.

(BEGIN VIDEO CLIP)

PETER BERGEN, CNN TERRORISM ANALYST: I find it hard to understand that decision. I mean here is bin Laden now suddenly popping up with annoying regularity on these audiotapes. Ayman el- Zawahiri producing more videotapes than Britney Spears. And they're closing down, you know, the bin Laden unit. I don't know, I think psychologically that sends a terrible message.

(END VIDEO CLIP)

ROBERTS: Robert Grenier, does it send a psychological message to bin Laden and to other terrorists out there?

GRENIER: Well, I think that it's sending a misleading message to all those who are hearing and fortunately I think that the news reports of this development have been highly misleading.

MCLAUGHLIN: Right.

ROBERTS: And, John McLaughlin, is it -- is it a symbolic victory for bin Laden? Can he carry this around and say the CIA gave up looking for me, they've shut down their unit?

You know, in the war of propaganda here, which is very important, does that give him another playing card?

MCLAUGHLIN: Oh, not at all. Not in the slightest. Al Qaeda is now a very decentralized movement, as you know, with attacks occurring around the world. When this unit was formed, al Qaeda was basically in Afghanistan in a hierarchical structure. It's now about Internet ideology and inspiration from bin Laden.

Think about it this way. If you're a fisherman trying to catch a fish in a big lake, are you better off casting one line or are you better off casting 25? Well, basically the CIA is now casting 25, 30 from different parts of this organization and bringing all of that information together.

ROBERTS: So the hunt for bin Laden goes on, just in a different form?

MCLAUGHLIN: Absolutely.

ROBERTS: John McLaughlin, Bob Grenier, thanks for being with us.

When we return, I'll have a few thoughts on the week at war and we'll look at what we'll be reporting on next week.

(COMMERCIAL BREAK)

ROBERTS: This was another week where Americans were left wondering where the world is headed and just how safe we really are.

The budding terrorist plot against the New York transportation system, North Korean missile tests, more bloodshed and scandal in Iraq, worsening violence in the Middle East and Iran's continuing defiance over its developing nuclear program. It does seem like there are wolves at every door. And while over the course of American history, that's nothing new, one foreign policy scholar did tell me this week that the world is probably more troubled now than at any time since the fall of the Iron Curtain.

Let's take a look at the week ahead.

On Monday, the trial of Saddam Hussein resumes, with the defense preparing closing arguments.

Thursday, President Bush stops off in Germany on his way to Russia for the G8 summit. The summit begins Saturday in St. Petersburg.

Thanks for joining us on THIS WEEK AT WAR.

I'm John Roberts.

Straight ahead, a check of the headlines. Then, "CNN PRESENTS: UNDERCOVER IN THE SECRET STATE."

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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